What to Look for in Salesforce.com Earnings

Salesforce.com Inc. (NYSE: CRM) is set to report its fiscal fourth-quarter financial results after the markets close on Wednesday. Consensus estimates from Thomson Reuters call for $0.19 in earnings per share (EPS) on revenue of $1.79 billion. In the same period of last year, it posted EPS of $0.14 and $1.44 billion in revenue.

This company posted solid earnings over the course of 2015. Salesforce also has been a momentum stock trader’s dream over the past few years.

Many on Wall Street feel that while the stock trades mostly in line with its fast organic software-as-a-service (SaaS) peer group, which many saw as having the largest growth rate in 2015, the company should trade at a premium to the group. Its growing portfolio of enterprise-class solutions have not only enhanced the brand but helped to achieve access into bigger companies.

Wall Street analysts see substantial billings growth, and many already have raised their fiscal 2016 estimates on both revenues and earnings. Importantly, the company’s new analytics products are factored into many 2016 estimates and could provide upside.
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Salesforce’s Platform business now generates $1 billion of annual subscription and support revenues, equal to about 16% of Salesforce’s total revenue mix. The Platform segment includes Force.com (enterprise-grade, hosted in Salesforce’s data centers) and Heroku (hosted on AWS, more of an elastic cloud, supports most new programming languages).

A few analysts weighed in on this company ahead of its earnings report:

• Wedbush has an Outperform rating and a $92 price target.
• Roth Capital reiterated a Buy rating.
• Oppenheimer reiterated an Outperform rating with an $88 price target.
• Brean Capital initiated coverage with a Buy rating and a $100 price target.

So far in 2016, Salesforce has underperformed the broad markets, with the stock down nearly 20% year to date. Over the course of the past 52 weeks, the stock is relatively flat.

Shares of Salesforce traded down 2% at $61.65 on Wednesday, with a consensus analyst price target of $88.04 and a 52-week trading range of $52.60 to $82.90.

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